Key Concerns/IssuesThe key concerns and issues surrounding government spending and taxation is clearly outlined in the latest Flaherty speech given at the Canada 2011 Budget. The issues are how to create more jobs and growth and provide tax cuts to improve the financial security of Canadian families without going into a deficit. Especially with the global recession, Canada needs to tighten the government spending while at the same time reduce the deficit. However, how can this be accomplished without imposing higher taxes or cutting payment to crucial services like health care and education? Flaherty makes the argument that, by doing that you will stall the recovery, kill hundreds of thousands of jobs and set families back.

Resulting Challenges to CanadiansWith a large deficit every year, Canada will develop a huge debt that will be difficult to pay off. Greece right now is in a similar but more drastic situation, where it cannot pay off its debt. If the debt is too large, it is no longer an option to print currency to pay the debt, seeing as that would lead to high inflation. Inflation would directly affect Canadian citizens. Taxes would be raised without a doubt and people would be forced to pay very high tax rates and receive extremely lackluster government services for years until the debt is paid. Currently, the Canadian debt is growing at a rate of almost $1,000 per second. Clearly this is unreasonable and finding a way to balance our budget each year is a major concern.

One possible solution to the problem of Canada’s growing deficit would be to increase taxes on Canadian citizens. While this may not sit well with the already financially struggling Canadian economy, it will benefit us in the long run by diminishing our debt to other countries now, as opposed to letting it build up on interest. Another possible solution to our growing deficit would be to decrease government spending. While our infrastructure and growth would suffer, it would allow us to lower our debt and allow for greater economic growth in the future.